What is a letting agent?

16/09/20What is a letting agent?

Whether you’re a landlord with a portfolio of properties, or a newcomer to the buy-to-let market, you might want to consider using a letting agent.

A letting agent is rather like a landlord's stand-in, and is there to do all the things necessary to make a property rental run as smoothly as possible.

Renting out property might appear pretty straightforward, but it can be an enormously consuming business.

Firstly, you require both the time and energy to deal with tenants’ queries and problems.

For example, you need professionals like plumbers and electricians on speed-dial so they can quickly carry out all those essential repairs and you must also keep up to date with relevant legislation and regulations.

The advantages of not using a letting agent might be maximising the profits from your rentals, but this could be a false economy unless you are both time rich and knowledgeable.

Factor in that you are competing with 2,594,720 other landlords in the UK, and you might want to give yourself a head start by hiring a professional.

In a nutshell, the letting agent’s job is to find suitable tenants for a property on behalf of its owner.

They will also complete referencing, inspect or maintain the property and maybe even chase up arrears on your behalf.

Of course, you have to remember that the ultimate responsibility and liability for a property lies with the landlord even if a letting agent manages it.

What a letting agent provides

Letting agents can offer different services depending upon how hands-on you wish to be.

What you pay will depend upon the level of service, geographical location and the type of property you’ll be renting out.

How does it work?

 The agent will visit a property to determine the potential rental income.

This valuation is usually done for free.

It is up to you, together with the agent, to agree on the rent.

The agent can then advertise the property.

That can be done in many ways; they can post the details in the estate agent’s window, advertise it in newspapers and magazines - both local and national - and feature it on property websites.

It is usually the agent who will show prospective tenants around and inform you of any interest shown or offers made on the property.

They can act as a go-between during negotiations before a tenancy agreement is signed.

For example, would-be tenants might try to offer a lower rent or ask for extra furniture to be provided.

Once you and the prospective tenant have come to an agreement, the agent will provide a tenancy agreement - a legal contract - for both parties to sign.

All of this can usually be done through the agent by phone or post, so there is no need to visit the property or meet the tenants (although you might want to).

Finding tenants

 This is arguably the most basic service a letting agent offers, but of course without tenants you have no income, so it’s clearly an essential part of the job.

They’ll take professional photos and floor plans of the property, and advertise it widely.

They can also arrange, and attend, viewings, conduct any referencing or right-to-rent checks, and set up a tenancy agreement.

Signed by both the tenant and the landlord, it is legally enforceable.

A letting agent can even create an inventory of the property for accurate and fair deposit deductions at the end of tenancy.

If you only choose this service, you will be able to find a tenant to rent the property, then manage the ongoing aspects of the tenancy such as rent collection, maintenance, property inspections and deposit disputes yourself.

Collecting rent

 In an ideal world, every tenant would pay their rent on time.

However, of course that doesn’t always happen, and you as the landlord may find yourself in a situation where you have to deal with non-payment.

If you use a letting agent, the money collection is taken care of; they can chase rent arrears, serve notices or advise you about the tenants who don’t pay.

Some will even offer insurance that protects your income if a tenant is in arrears.

Fully managed service by the letting agent

This is where the letting agent can take all the day-to-day management out of your hands.

It includes:

 

Which service do I need?

If you are only renting one or two properties, and live close by, the chances are you won’t need the full service - although of course you can choose to have it.

You could just engage the letting agent to help you to find a tenant and then choose to use a rent collection service if you don’t want the hassle of having to chase payments.

A fully-managed service will be of benefit if the property you own is at a distance from where you live.

For example, you might be abroad for all, or part, of the year, or you may have a large property portfolio that means you cannot manage every single one.

Protection offered by letting agents

By law, all letting agents must be part of a redress scheme.

This ensures you can further any complaint you have against your agent to a mediator organisation, with the possibility of compensation.

All letting agents must be part of a Client Money Protection (CMP) scheme, which ensures you are entitled to claim any monies lost through misappropriation of your funds or if the agent goes bust.

Good letting agents also have expertise in the latest legislation and regulation in the private rental sector.

For example, they’ll be aware that rules compelling landlords to conduct regular electrical safety checks are expected to be introduced this year, possibly on a phased basis – starting with new tenancies.

This means they will ensure your property and any tenancy agreements will be legal.

How can I trust my letting agent?

One good thing about dealing with letting agents is that they have to be part of an approved redress scheme.

This has been a legal requirement since October 2014.

Redress schemes can help you resolve a dispute between you and your letting agent.

Both landlords and tenants can complain.

The CMP, mentioned above, also insures any money paid by the landlord or tenant, so that if it is stolen by the agent, the landlord is covered.

According to the CMP regulations, as well as all letting agents being required to sign up to a government-approved scheme, they are all required to display which they belong to.

There are plans for further regulation of the lettings industry, including a new licensing regime, code of practice, regulator and training requirements.

The recommendations were made in July 2019, although there has been no news as to if and when change will happen.

Are they the right letting agent?

Here’s a checklist that may help you to decide:

Will they get you the right tenants for your property?

You don’t want a shared house full of students renting a house that’s more suitable for a family. Remember, you can also get the letting agent to do the relevant checks to ensure tenants can pay the rent and make sure the property is looked after.

Will they find tenants quickly?

Finding tenants immediately could suggest they aren’t fussy about who they put in to the property.

Are they open about their fees?

Letting agents have to be transparent about their fees, and if you’re unable to find them on their website they are actually breaking the law.

Does the letting agent provide tenants with all the legally-required documentation at the start of their tenancy?

A good agent will provide all the documents that the tenant legally requires. If the agent breaks the law by not providing the right documents, it could be you who takes the blame.

If the tenant falls into arrears what will they do?

Your letting agent should be equipped with the knowledge and correct legal paperwork to regain your property in the worst case scenario.

How often will they visit the property on your behalf?

You want a letting agent that regularly communicates and updates you about the condition of the property and any feedback from the tenants.

Will they offer regular safety checks and inspections?

You’ll want the letting agent to check a property is fit to live in before the tenant moves in and also make regular visits to confirm it is safe and compliant.

The law is constantly changing but landlords are legally responsible if, for example, a boiler isn’t regularly serviced.

How much does a letting agent cost?

Fees vary, but agents will usually base their charges on a percentage of the monthly rent.

Fees for agents can range from below 10 per cent of the rent to above 20 per cent depending on the service.

Full property management can cost anything from 12 to 20 per cent of the total rent, depending on the area and which managing agent you choose.

Can you negotiate on fees?

Yes. It's a competitive market, so you should compare several quotes and be prepared to haggle to get the best deal.

money on desk

What can you do if you’re not happy with your letting agent?

Letting agents who are ARLA (Association of Renting and Letting Agents) Propertymark Protected are part of a redress scheme and CMP scheme.

They undertake regular training to guarantee they are up-to-date with the latest legislation.

They are also required to follow a recognised code of practice, but of course there are letting agents out there that may not provide the service you expect.

In those instances, there are several avenues you can follow.

Complain to them directly

You could write to the manager making it clear why you are complaining and what resolution you are looking for, or use their internal complaints procedure if they have one.

Alternative dispute resolution

Letting agents have to be part of an approved redress scheme.

This has been a legal requirement since October 2014.

Redress schemes can help you resolve a dispute between you and your letting agent.

Both landlords and tenants can complain to these schemes.

All letting agencies must clearly state which scheme they are members of.

The government-backed examples are:

Complain to a trade body

Find out whether your agent is a member of a trade body or professional association.

The main trade bodies for letting agents are:

 

Complain to trading standards

If your agent is not a member of a professional organisation, or if you're still unhappy, there are still some ways to further your complaint.

You may think your letting agent has breached the Consumer Rights Act, which came in to force on October 1, 2015.

A letting agent may have breached the Consumer Rights Act if it:

 Use the small claims court

If you’ve lost money because of your letting agent’s poor service, you could take it to the small claims court.

You should get help from a legal professional before doing so.

 To find out more about how a letting agent can help you as a landlord, get in touch with us at growproperty.co.uk

 

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